Over the past year there has been considerable focus on Britain’s relationship with China and the opportunities it can bring to secure much-needed foreign direct investment in our economy. In Sheffield, this is something we have been working on for a number of years. We have a well-established relationship with our sister city Chengdu, and the University of Sheffield is home to thousands of Chinese students.
Chinese investors are funding the £65m New Era Square development, close to the city centre. This summer much of this collaboration culminated in a landmark partnership with Sichuan Guodong Construction Group, a Chinese conglomerate with numerous interests, which is listed on the Shanghai stock market. It has been seeking opportunities to invest and expand its business interests outside of China for a number of years. Personal connections with Sheffield, the opportunities Sheffield presents, and the strategic relationships between our city and Chengdu – where Sichuan Guodong is based – have helped to secure the deal.
Under the partnership, Sichuan Guodong will commit to an initial £220m investment in Sheffield, which will fund a number of projects as part of the development and regeneration of the city centre over the next few years. This is one of the biggest Chinese investment deals in a UK city outside of London, and it is the first deal of its kind to be made anywhere in the country. What we have here is an investor putting its money into Sheffield and making a 60-year commitment to the city, for the benefit of future generations.
The partnership confirms Sichuan Guodong’s long-term commitment to working with Sheffield. As a result, a whole range of projects become viable, because there isn’t the same pressure to make large returns in a shorter time frame. As a city, our role in the partnership is about giving Sichuan Guodong a great offer to invest in. We are working with them on how the initial £220m will be spent.
The focus will be around city centre residential, office, retail and leisure projects, all of which are essential in creating a dynamic city centre. This is an exciting opportunity to deliver on the ambitions and aspirations we have set out for our city centre.
Usually the barrier we face is securing the investment to achieve our goals. So, how did we get here? This partnership has been more than 18 months in the making, and is the result of huge personal commitment on behalf of the council’s leadership and the chairman of Sichuan Guodong, Mr Wang.
The initial contact was made thanks to Sheffield’s links with Chengdu. When the potential opportunities became apparent, we invested time in building trust and working intensively with Sichuan Guodong to explore the mutually beneficial opportunities. In October 2015 a memorandum of understanding was signed between Sheffield City Council, Sichuan Guodong and the government body UK Trade & Investment. This committed the parties to exploring the possibility of establishing a long-term, strategic relationship to fund the economic regeneration of Sheffield.
Since then the council has worked intensively, culminating in the signing of the partnership agreement in July. This partnership has the potential to be groundbreaking for Sheffield. Like many of Britain’s cities outside London, it has a number of world-class assets – including our innovation district, the Advanced Manufacturing Research Centre, and the Olympic Legacy Park – as well as being at the forefront of new industries such as digital and health-care technology.
The challenge we face is gaining the commitment of investors to deliver partnerships on a scale that will be transformational. The commitment that Sichuan Guodong has made to Sheffield is a huge vote of confidence in our city and sends out the message that we are able to compete with anyone to attract an investment of this nature. If we are to take this to the next level to transform our economy, it is essential that we are actively supported by the government.
The appointment of Greg Clark as Secretary of State with responsibility for industrial strategy is an encouraging step in the right direction, especially considering his track record of commitment to new industries, to cities and the north of England. However, the government’s commitment cannot be purely rhetorical; it must go beyond talking about its ambitions for the north of England.
On a financial level, cities need to be given the support to get partnerships up and running, get projects off the ground and inspire confidence in the north. We require funding on a level given to regional development agencies before national investment for regional economic development was decimated in the last parliament.
While some funding was secured in the devolution deals that were struck when George Osborne was chancellor, this is still only a fraction of the money that was previously available. There was recognition from Osborne at the time that these devolution deals were not an end in themselves, but a starting point for the government’s commitment to rebalancing the economy.
What we need to see now is the financial resources to build on deals such as the one secured with Sichuan Guodong, so that foreign direct investment can create the most effective public-private partnerships to support the economies of our great cities outside London. We have demonstrated what can be achieved when a city like Sheffield can connect with an investor that sees the potential of our region and makes a commitment to it.
The council wants to send out a message that Sheffield is open for business. We have also recently signed co-operation trade agreements with the city of Daqing, the leading centre for the oil and gas industry in China and location of the World Snooker International Championship, and with the city of Nanchang. The announcement of a deal with Sichuan Guodong is just the start; we now have much to deliver on.